The first photo is of the Shak IPO---and the second is the 2-hour "soup kitchen/depression-style" line-up for free burgers in front of the NYSE.
This tiny story, which will take 30-seconds of your time, was posted on the Zero Hedge website at 12:16 p.m. EST yesterday---and I thank Dan Lazicki for today's first news item.
U.S. Treasury yields are plunging again this morning. From 4-year maturities out, yields are around 10bps lower with 30Y under 2.30%, 10Y under 1.65%, 7% under 1.5%, and 3Y under 75bps!! Since QE3 ended, 30Y bond yields are 84bps lower, 2Y 3bps lower.
This week things have escalated...and since the end of QE3, the curve has collapsed.
It's just a good job consumer sentiment is at 11-year highs or one might suspect we are heading into recession/depression.
The three charts embedded in this Zero Hedge piece from very late yesterday morning EST were sent to me by Dan Lazicki---and this is his second offering in a row in today's column. They're worth a quick look.
In a somewhat stunning admission of the truth in central planning (that the Swiss just experienced first hand - and perhaps Venezuela has been experiencing for years), The Philly Fed's Charles Plosser explains the following...
"It may work out just fine, but there’s a risk to that strategy, and the risk is that we wait until the point where markets force us to raise rates and then we have to react quickly and aggressively. I believe that if we wait too long, then we run the risk of falling very far behind the curve or disrupting the economy by rapid rate increases.
The history is that monetary policy is not ultimately a very effective tool at solving real economic structural problems. It can try for a while but the problem then is that it’s only temporarily effective, and when you can’t do it anymore you get the explosion yesterday in the Swiss market.
One of the things I’ve tried to argue is look, if we believe that monetary policy is doing what we say it’s doing and depressing real interest rates and goosing the economy and we’re in some sense distorting what might be the normal market outcomes at some point, we’re going to have to stop doing it. At some point the pressure is going to be too great. The market forces are going to overwhelm us. We’re not going to be able to hold the line anymore. And then you get that rapid snap back in premiums as the market realizes that central banks can’t do this forever. And that’s going to cause volatility and disruption.
This Washington Post article was given the Zero Hedge treatment in a posting datelined 9:05 p.m. EST on Friday evening---which is a neat trick considering that Dan Lazicki sent it to me at 2:26 p.m. EST yesterday afternoon. This is worth reading.
For the 8th week in a row (something that hasn't happened since June 2009), U.S. total rig count plunged. This week's 90 rig drop to 1,543 is the largest so far (with oil rigs down 94 to 1,223 - lowest since Jan 2013). The total rig count is now down 20% in the last 8 weeks to the lowest since June 2010 as it tracks the 4-month lagged oil price perfectly.
This is the 2nd biggest 8-week drop in 22 years. This - rather unsurprisingly - has led Chevron to decide to cut 23% of its Pennsylvania workforce "due to activity levels." Not 'unambiguously positive' as so many in the central planning bureaus would have everyone believe.
This brief Zero Hedge article showed up on their website at 1:14 p.m. EST yesterday---and this is the fourth article in a row from Dan Lazicki. The chart in this story is worth the trip.
Oil prices roared back from six-year lows on Friday, rocketing more than 8 percent as a record weekly decline in U.S. oil drilling fueled a frenzy of short-covering.
In a rally that may spur speculation that a seven-month price collapse has ended, global benchmark Brent crude shot up to more than $53 per barrel, its highest in more than three weeks in its biggest one-day gain since 2009.
The late-session surge was primed by Baker Hughes data showing the number of rigs drilling for oil in the United States fell by 94 - or 7 percent - this week. Earlier gains were fueled by reports of Islamic State militants striking at Kurdish forces southwest of the oil-rich city of Kirkuk.
This Reuters article, filed from New York, put in an appearance on their Internet site at 4:28 p.m. EST on Friday afternoon---and once again I thank Dan Lazicki for sharing it with us.
Oil prices have fallen by more than half since July. Just five years ago, such a plunge in fossil fuels would have put the renewable-energy industry on bankruptcy watch. Today: Meh.
Here are seven reasons why humanity’s transition to cleaner energy won’t be sidetracked by cheap oil.
This very interesting Bloomberg article showed up on their website at 6:51 a.m. EST on Friday morning---and the stories from Dan just keep on coming.
On the Global Research News Hour this week, we spend the hour discussing the looming collapse scenarios facing the United States with Russian-American engineer Dmitry Orlov.
Orlov’s perspective on collapse is informed by his extended trips to his former homeland before and during its collapse.
Orlov believes and states that the former Soviet Union was set up to be resilient in the face of collapse. This, he believes is not the case in the U.S. or Canada.
In this interview, Orlov also comments on the current situation with low oil prices, peak oil and its impact on agriculture, Russian moves in alignment with China, overtures toward the E.U., the politics of austerity, the Ukraine Civil War as Anglo-Imperialist Departure Strategy, and much more.
This hour long audio interview is embedded in this article that appeared on the globalresearch.com website on Monday---and for length reasons, had to wait for my Saturday column. It's the first contribution of the day from Roy Stephens. It's worth your while if you have the time.
Photographer Iwan Baan travels the world, living out of a suitcase and hotel rooms exclusively, in order to document architectural marvels in far-flung locales like the middle of Africa and China. For an advocate of aerial vantage points, drones are often the only way to get up in the air and show the surroundings and the context to give a sense of place within the city or environment. These are photographs and videos that would not have been possible without the remote-controlled technology, exposing new parts of the world.
Similarly, Sir Norman Foster recently narrated a drone video tour of the Hearst Tower in New York City, a polished 3-minute edit that offers a glimpse inside the normally secret building — with the permission of Hearst, of course. While the video shows architecture in an amazing (albeit officially sanctioned) new light, there are other, more subversive uses of unmanned aerial vehicles and photography that are pushing our ideas of privacy, voyeurism, the media, visual trespassing, and even ownership and political resistance. This technology is changing the way we access previously hard-to-reach places, which has potential to open up new territories and expose previously unseen sites, giving the power of producing media transparency to anyone who can fly a remote-controlled aircraft.
This very interesting article was posted on the architizer.com Internet site on Thursday, January 22---and I thank Roy Stephens for sending it my way last Saturday. For obvious content reasons, it had to wait for today's column.
Mary Noriega heard there would be chicken. She hated being herded “like cattle,” she said, standing for hours in a line of more than 1,500 people hoping to buy food, as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week.
But Ms. Noriega, a laboratory assistant with three children, said she had no choice, ticking off the inventory in her depleted refrigerator: coffee and corn flour. Things had gotten so bad, she said, that she had begun bartering with neighbors to put food on the table.
“We always knew that this year would start badly, but I think this is super bad,” Ms. Noriega said.
Venezuelans have put up with shortages and long lines for years. But as the price of oil, the country’s main export, has plunged, the situation has grown so dire that the government has sent troops to patrol huge lines snaking for blocks. Some states have barred people from waiting outside stores overnight, and government officials are posted near entrances, ready to arrest shoppers who cheat the rationing system.
This article showed up on The New York Times website on Thursday---and it's the third offering in a row from Roy Stephens.
As part of a bid to offset the impact of the surging Swiss franc, companies are resorting to paying employees in euros or handing heavier salary cuts to cross-border workers. But unions warns the practice could be illegal.
Labour unions attest that Graubünden-based road transport company Della Santa informed its employees through an SMS to furnish bank details of a euro account for payment of wages. The company employs around 100 people. Unions denounced the company’s policy, calling it illegal, and also warned that such practices could lead to a more permanent lowering of salary levels.
“Considering that Italy-based workers get a salary hike of 20% compared to the Swiss, we’ve decided to create new work contracts that stipulate an exchange rate of 1.22 francs to the euro,” explained company owner and director Romano Della Santa. However, he added that employees will continue to be paid family support contributions in francs.
This news item showed up on the swissinfo.ch Internet site at 12:16 p.m. Europe time yesterday afternoon---and I thank South African reader B.V. for sending it our way.
The battle lines between Greece and its creditors were drawn in Athens as the Greek finance minister announced that the new government would refuse to engage with representatives of the country’s hated troika of lenders.
Standing his ground after talks in the capital with Jeroen Dijsselbloem, head of the eurogroup of E.U. finance ministers, Yanis Varoufakis said Greece would not pursue further negotiations with the body of technocrats that has regularly descended on the country to monitor its economy. Nor would it be rowing back on election-winning pledges by asking for an extension to its €240bn (£180bn) bailout programme. “This platform enabled us to win the confidence of the Greek people,” Varoufakis said, insisting that the logic of austerity had been repudiated by voters when the far-left Syriza party stormed to victory in Sunday’s election.
Greece has lost more than a quarter of its GDP, the worst slump in modern times, as a result of consecutive waves of budget cuts and tax rises enforced at the behest of creditors. Varoufakis and the new Greek prime minister, Alexis Tsipras, who also met Dijsselbloem on Friday, are adamant that the government will deal only with individual institutions and on a minister-to-minister basis within the E.U. They have vowed to shun auditors appointed by the troika of the EU, the European Central Bank and the International Monetary Fund.
This news story showed up on theguardian.com Internet site at 6:21 p.m. GMT on Friday---and it's the second contribution in a row from reader B.V.
In the first days after the election victory of the leftist party Syriza in Greece, Yanis Varoufakis, the new finance minister, has lobbed some rhetorical grenades, referring to his country’s foreign-imposed austerity budgets as “fiscal waterboarding” and calling Greece’s international bailout deals “a toxic mistake.”
Now, faced with the need to make good on promises to negotiate debt relief for his beleaguered nation, he seems eager to send a more moderate message.
“People have described this as a Wild West showdown,” he said, sighing in frustration, “but it is not a ‘yes or no, take it or leave it’ situation.”
Settling onto a couch, Mr. Varoufakis — a self-described “accidental economist” and “erratic Marxist” — sketched out what he said was the heart of the problem: Greece’s debt is unsustainable and austerity constituted “fiscal waterboarding, where we are constantly having our head held under water."
This essay/interview put in an appearance on The New York Times website on Thursday sometime---and I thank reader Michael Cheverton for bringing it to our attention.
It’s time for Greece to leave the euro, default on its debt and move on. I write this with a heavy heart as the short-term consequences for ordinary Greeks could be disastrous, but there is now no other practical way out.
Syriza is serious about change and simply will not honour the country’s debts or stick to international agreements. Germany is equally serious about not accepting a debt write-off. A N24/TNS poll shows that 43pc of Germans are unwilling to negotiate debt relief or a longer loan repayment schedule with Greece. As to Brussels, the European Commission president Jean-Claude Juncker has said that “there’s no question of writing down Greek debt”. The stand-off will escalate, and escalate further. Neither side will blink, which means that a Grexit and default is now almost inevitable.
At least 77pc of Greek government debt is owned by official bodies or governments, according to Open Europe, rather than the private sector, so a massive default won’t be catastrophic for private institutions. Anybody with any sense will have seen this coming, and sold as much Greek debt as they could get away with.
Sadly, Alexis Tsipras, the new prime minister, is a delusional socialist. He doesn’t want to privatise state assets and leads a party that doesn’t accept economic reality. But even though his analytical framework is entirely wrong, some of his conclusions are actually right. The Greeks have suffered far too much in recent years, and something needs to change. The problem is that the Tsipras way will inevitably lead to disaster in the long run.
This commentary appeared on the telegraph.co.uk Internet site at 8:48 p.m. GMT on Thursday evening---and it's another offering from reader B.V.
We will find out the answer to the question posed in the title in the outcome of the contest between the new Greek government, formed by the political party Syriza, and the ECB and the private banks, with whose interests the EU and Washington align against Greece.
The Spartans, whose red cloaks and military prowess struck fear into the hearts of both foreign invaders and Greek opponents in the city-states, are no more. Athens itself is a ruin of its historical self. The Greeks, who were once to be contended with, who were able with 300 Spartans, supplemented with a few thousand Corinthians, Thebans, and other warriors, to stop a one hundred thousand man Persian army at Thermopylae, with the final outcome being the defeat of the Persian fleet in the Battle of Salamis and the defeat of the Persian army in the Battle of Plataea, are no more.
The Greeks of history have become a people of legend. Not even the Romans were able to conquer Persia, but little more than a handful of Greeks stopped the attempted Persian conquest of Greece.
But the Greeks, despite their glorious history, could not stop their conquest by the EU and a handful of German and Dutch banks. If the Greece of history still existed, the EU and the private banks would be cowering in fear, because the EU and the private banks have ruthlessly exploited the Greek people and represent the same threat to Greek sovereignty as Persia did.
This must read commentary on Greece by Paul showed up on his website on Thursday sometime---and it's courtesy of reader B.V.
Alexis Tsipras couldn't have picked a more symbolic place to show his voters that he is a prime minister like no other Greece has seen before -- -- and that he is truly serious about standing up to the Germans.
On Monday, right after he was sworn in, he was chauffeured in his sedan to the Kesariani rifle range, a memorial to Greek resistance fighters that is revered in the country as the "altar of peace."
It was here, on the outskirts of Athens, that German occupying troops shot a total of some 600 resistance fighters -- some just before the end of the war, on May 1, 1944 -- along with roughly 200 communists from the Haidari concentration camp. The youngest victim was only 14 years old.
As Tsipras stepped out of his car and made his way through the park to the memorial stone, several hundred people crowded around him. People reached out to touch, congratulate, hug and kiss him. The few bodyguards surrounding the politician barely shielded him from the crowd. Alexis Tsipras, 40, the youngest prime minister in Greek history, also intends to be its most unusual leader -- a man of the people who is determined to fundamentally change his country.
This longish essay appeared on the German website spiegel.de at 8:31 p.m. Europe time on their Friday evening, which was 2:31 p.m. in New York. It's definitely worth reading---and I thank Roy Stephens for finding it for us.
For the past two weeks, I have focused on the growing fragmentation of Europe. Two weeks ago, the murders in Paris prompted me to write about the fault line between Europe and the Islamic world. Last week, I wrote about the nationalism that is rising in individual European countries after the European Central Bank was forced to allow national banks to participate in quantitative easing so European nations wouldn't be forced to bear the debt of other nations. I am focusing on fragmentation partly because it is happening before our eyes, partly because Stratfor has been forecasting this for a long time and partly because my new book on the fragmentation of Europe — Flashpoints: The Emerging Crisis in Europe — is being released today.
This is the week to speak of the political and social fragmentation within European nations and its impact on Europe as a whole. The coalition of the Radical Left party, known as Syriza, has scored a major victory in Greece. Now the party is forming a ruling coalition and overwhelming the traditional mainstream parties. It is drawing along other left-wing and right-wing parties that are united only in their resistance to the E.U.'s insistence that austerity is the solution to the ongoing economic crisis that began in 2008.
The story is well known. The financial crisis of 2008, which began as a mortgage default issue in the United States, created a sovereign debt crisis in Europe. Some European countries were unable to make payment on bonds, and this threatened the European banking system. There had to be some sort of state intervention, but there was a fundamental disagreement about what problem had to be solved. Broadly speaking, there were two narratives.
This very interesting commentary is worth reading if you have the time---and/or the interest. It appeared on the stratfor.com Internet site on Wednesday---and was awaiting a spot in today's column. I thank Dan Lazicki for sending it our way.
KOMMERSANT: What is the goal of U.S. policy as far as Ukraine is concerned?
GEORGE FRIEDMAN: For all of the last 100 years Americans have pursued a very consistent foreign policy. Its main goal: to not allow any state to amass too much power in Europe. First, the United States sought to prevent Germany from dominating Europe, then it sought to prevent the USSR from strengthening its influence.
The essence of this policy is as follows: to maintain as long as possible a balance of power in Europe, helping the weaker party, and if the balance is about to be significantly disrupted -- to intervene at the last moment. And so, in the case of the First World War, the United States intervened only after the abdication of Nicholas II in 1917, to prevent Germany from gaining ground. And during WWII, the U.S. opened a second front only very late (in June 1944), after it became clear that the Russians were prevailing over the Germans.
What is more, the most dangerous potential alliance, from the perspective of the United States, was considered to be an alliance between Russia and Germany. This would be an alliance of German technology and capital with Russian natural and human resources.
KOMMERSANT: Today, who in your opinion is the United States trying to restrain?
GEORGE FRIEDMAN: Today the U.S. is seeking to block the emergence of a whole range of potential regional hegemons: Serbia, Iran, Iraq. At the same time, the U.S. authorities take advantage of diversionary attacks. For example, in a battle, when the enemy is on the verge of achieving victory, you hit him in the side get him off balance. U.S. does not seek to "defeat" Serbia, Iran or Iraq, but they need to create chaos there, to prevent them from getting too strong.
If I had to put my marker down on one story in today's column that tops the absolutely, positively must read category---this would be it. It appeared on the russia-insider.com Internet site on Tuesday, January 20---and my thanks go out to Brad Robertson for bringing it to my attention, and now to yours.
"We are at a serious turning point."
This is almost too depressing to discuss. Washington support for Ukraine continues on several fronts. Washington, Kiev, and NATO all seem comfortable with supporting each other about everything from re-writing Russia's history in WW2 to looking positively on NATO military support for Kiev against the Eastern rebels and Russia. Poroshenko has even vowed to retake the Crimea once the Donbass is dealt with effectively by a NATO bolstered Kiev military.
Cohen firmly states that the understanding in Russia and to any thinking person is effectively the escalation of a civil war in Ukraine to a proxy war with Russia and the West. Again he emphasizes that all this is going on virtually no press treatment or discussion in the United States. This effectively means that Washington will be going to war without its own population ever being really aware of any real facts behind the conflict. Was the average German citizen in pre-war Germany any better informed?
Of additional interest, the Russian economy was discussed; the repercussions of what would happen if Russia was denied access to the SWIFT system were looked at in detail. Cohen has looked into this in similar detail as Paul Craig Roberts and other notables (China would help if necessary) but with the caveat that should Russia be isolated financially, it would be seen as an act of war and that a Russian response could involve confiscation of Western assets with Russia. Again we are reminded that although Russia is hurting, it is far from out for the count and its blow back efforts would hurt the West severely. From my perspective Putin is trying to avoid war with Washington that shows every sign of having war as a goal or is simply too incompetent to deal with the situation. Cohen states that Obama apparently has passed the baton to V.P. Biden and wonders why?
This 39:55 minute audio interview appeared on the johnbatchelorshow.com Internet site on Tuesday, January 27---and I thank Larry Galearis for sharing it with us.
Russia unexpectedly backed away from its efforts to prop up the ruble, cutting interest rates just weeks after taking them to an 11-year high and signaling policy makers are now focused on mitigating an economic slump that threatens to destabilize the financial system.
The central bank lowered its benchmark rate to 15 percent from 17 percent, spurring a wave of ruble selling that drove it down as much as 4 percent against the dollar to levels not seen since panic swept across Moscow’s financial markets last month. The interest-rate cut surprised all but one of the 32 economists surveyed by Bloomberg.
Central bank Governor Elvira Nabiullina has come under pressure from officials and business leaders, including billionaire Oleg Deripaska, who’ve warned that the economy will grind to a halt and undermine banks unless rates come down. The central bank had raised the benchmark rate six times last year, including a 6.5-point increase in December that was the biggest since 1998, to defend the ruble and tame inflation stoked by international sanctions related to the Ukraine conflict.
This Bloomberg news item, co-filed from Moscow and London, appeared on their website at 3:32 a.m. Denver time yesterday morning, which was 1:32 p.m. Moscow time on their Friday afternoon. It's definitely worth reading if you have the time---and I thank West Virginia reader Elliot Simon for his lone contribution to today's column.
It’s difficult to imagine more challenging analysis. The global nature of the current Credit Bubble creates dynamics and complexities dissimilar to previous Bubble cycles. There are extraordinary uncertainties – in hyper-speculative global markets, in experimental policy making, in unsettled societies and unstable geopolitics. Never have market perceptions mattered as much. And never before has global activist monetary management so impacted market sentiment and prices – well, at least going back to the late-twenties.
I have written that I am these days more worried than in 2007, and back then I was quite apprehensive. And while today’s global risks dwarf those of 2007, complacency and faith in central bankers have become so deeply embedded in securities and derivative prices. Never has there been such extreme divergence between inflating securities markets and deflating future prospects. As an analyst of Bubbles, I contend with the inevitable “chicken little” issue.
This week offered important confirmation of my global macro thesis. Greece, a eurozone member, has a democratically elected radical party now controlling parliament and a leftist government led by a charismatic radical prime minister. A deeply disillusioned people have spoken, and they’re fed up with Greek affairs being dictated from Brussels and Berlin. Post-Bubble dislocation and ongoing policy-induced wealth redistribution finally reached the breaking point. Sunday’s Greek election has left wing, right wing, anti-euro and anti-establishment parties throughout Europe further emboldened. Greece is now moving rapidly toward a conflict with the EU, with potentially profound consequences for global markets. The “Game of Chicken” has officially commenced.
Because the credit bubble has now enveloped the whole planet, I thought it best that I insert Doug's weekly Credit Bubble Bulletin at this point in the Critical Reads section. Although somewhat on the longish side, it always falls into the absolute must read category---and always for very good reason, especially in the circumstances we find ourselves in today. So please find the time to digest this sometime between now and when my Tuesday column appears. It was posted on his creditbubblebulletin.blogspot.ca Internet site late on Friday evening---and I found it all by myself!
Listen to Eric Sprott share his thoughts on the ongoing volatility in currency markets, the truth behind recent U.S. economic data and the state of all economies, and Thursday’s raid on silver.
This 7:39 minute audio interview with Eric was conducted by sprottmoney.com's Geoff Rutherford---and it was posted on their website yesterday.
The latest update of the annual study by GFMS of world gold supply and demand makes for some interesting reading, and correspondingly interesting interpretations of the figures by the media. Mineweb has reported one such analysis suggesting that India has re-overtaken China as the World No. 1 gold consumer and some figures published within the report suggest that this may be the case – but this may well depend on what the interpretation of consumption actually is. The GFMS report suggests that Indian jewellery fabrication at 690 tonnes overtook that of China during the year, but appears to make no such bald statement that total Chinese demand fell back below that of India, although there are figures within the report which suggest this could be the case.
The GFMS report does note also, however, that Shanghai Gold Exchange (physical gold) withdrawals came in at just over 2,100 tonnes for the year and if this has not been ‘consumed’ one has to wonder where it is all going. Indeed even published figures on gold exports from Hong Kong, plus GFMS estimates on China’s own gold output come to a total of over 1200 tonnes alone and we have demonstrated here that Hong Kong is losing its place as being a proxy for total Chinese gold imports.
This was shown by noting the published data from the USGS that 32% of U.S. gold exports in October went to mainland China directly rather than via Hong Kong – a pattern which started in September. We are pretty certain that a good proportion of other export flows – notably from Switzerland – are also going direct to the mainland rather than in total via Hong Kong. The latter thus remains a very important import route for China’s gold but no longer quite as important as it used to be. Again overall this suggest that Chinese consumption may be considerably higher than the GFMS report appears to suggest.
Lawrie carves GFMS a new one, but in much too gentle a fashion to suit me. Maybe he's one of those proper English gentleman who won't say what he really thinks. Any report from GFMS, CPM Group, the World Gold Council---and The Silver Institute, should be read with your bulls hit meter on its high gain setting. They are all anti-precious metal organizations. Lawrie's commentary, filed from London, is certainly worth your while---and it was posted on the mineweb.com Internet site at 3:23 p.m. GMT on their Friday afternoon. I thank reader U.M. for another contribution to today's column.
Greece's new left-wing government will cancel plans to sell the state natural gas utility and is firmly opposed to a Canadian-run gold mine that is among the biggest foreign investment projects in the country, the energy minister told Reuters.
The comments on Friday by Panagiotis Lafazanis, who represents the more radical wing of the ruling Syriza party, further reinforces early signs that the government is sticking to campaign pledges that have chilled investment and unnerved financial markets.
The Skouries gold mine operated by Vancouver-based Eldorado Gold Corp. in northern Greece was the flagship project of the last government's foreign investment drive and considered a test case that would reveal whether Greece could protect foreign investors despite local opposition.
"We are absolutely against it and we will examine our next moves on it," Lafazanis, a 63-year-old former Communist, told Reuters at his new ministerial office. He declined to say if the government would try to block the project from going ahead.
This was a surprise---and I'll be more than interested in how this shakes out in the weeks and months ahead. Foreign investment in a country such as Greece is hard to come by in the current political and business environment---and he should be kissing their mining boots, giving them thanks that they're there at all. But what is obviously lost on this guy is the fact that it's really a money mine. I found this Reuters story, filed from Athens yesterday, on the gata.org Internet site.
National Commodities and Derivative Exchange (NCDEX) is planning a contract in the gold futures segment that includes delivery of gold refined by Indian companies. The contract has already received regulatory approval.
Earlier, NCDEX, primarily an exchange for agro commodities, had tried to introduce new gold contracts to expand its share in the non-agro commodities segment. It had introduced a gold hedging contract that reflected international gold prices alone.
Initially, two contracts will be launched in the futures segment — for 100g and one kg. While due-diligence of refiners is underway, chartered accountancy firm MM Chitalia has been appointed for financial due-diligence. Feedback from customers in this regard has been received.
This brief news item, filed from Mumbai, showed up on the business-standard.com Internet site at 10:53 p.m. IST on their Friday evening---and I thank Manitoba reader U.M. for her final contribution to today's column.
On December 31, 2014, China’s Ministry of Commerce announced that it had scrapped the quotas restricting exports of rare earth minerals and would replace them with a system of export licenses. The change follows China’s unsuccessful appeal of the World Trade Organization’s (WTO’s) March 2014 ruling that found the quotas were designed to benefit domestic firms and encourage foreign investment.
The export quotas had been in place since 2000 and raised shortage concerns in importers. In 2010, China’s drastic lowering of the quota triggered a sharp increase in the price of rare earth minerals, causing the U.S., the European Union and Japan to formally lodge a trade complaint in the WTO in March 2012.
Rare earth elements are the 17 minerals used to make hi-tech products such as hybrid cars, weapons, and mobile phones. China is the world’s biggest producer of rare earth elements and met 97 percent of global demand from 2005 to 2010.
China is also the world’s largest consumer of rare earth materials, with the country’s downstream industry consuming 70 percent of global production. Permissive climate regulations in China compared with Western jurisdictions mean that China is a leader in rare earth processing. For example, U.S.-based Molycorp sends its rare earth minerals to be processed in China because of strict environmental regulations in its home country.
This interesting news item put in an appearance on the asiabriefing.com Internet site back on January 19---and I thank John Archer for sliding it into my in-box late last night.
As I wrote last time on data from the Shanghai Gold Exchange (SGE), in week 2 of 2015 withdrawals from the vaults of the SGE (that equals Chinese wholesale demand) came in extremely high at 70 tonnes; the third highest amount ever. In week 3 (January 19 – 23), though, the Chinese withdrew even more at 71 tonnes, up 0.89 % w/w, and a new third highest amount ever. Year to date 202 tonnes have been withdrawn from the SGE vaults, up 15 % y/y. Like last week, this was happening while the price of gold was rising sharply, staggering numbers.
It’s still a mystery why mainstream media are not tracking weekly SGE withdrawals. I’ve read all over the news that Russia’s central bank has added 152 tonnes of gold in total to its reserves in 2014. In perspective, this is approximately the same amount of gold China has imported in the first three weeks of 2015.
This must read gold-related story appeared on the Singapore website bullionstar.com yesterday---and the first person through the door with it was Dan Lazicki.
The International Monetary Fund (IMF) is the world’s third largest official sector holder of gold behind the United States and Germany. According to the Fund’s web site, as at October 2014 “the IMF holds around 90.5 million ounces (2,814.1 metric tons) of gold at designated depositories.”
The IMF’s gold holdings were accumulated between 1946 and the late 1970s via Members’ initial quota subscriptions to the Fund, various quota increases, and through a number of additional methods where a Member either sold gold to the Fund or transferred gold to the Fund as part of a repayment obligation. Likewise, gold sometimes flowed in the other direction back to Members, in payment for a Member’s currency, during the 1970s gold restitutions, and via other sales to Members.
With renewed interest in central bank and official gold holdings at international storage locations, it is worth examining what exactly the IMF means by designated depositories and which specific depositories its gold was deposited into.
This absolute must read commentary by Ronan Manly appeared on the bullionstar.com Internet site on Friday---and I thank Dan Lazicki for his final offering in today's column.
Because everyone knows you BTFD when Janet Yellen speaks (and Sell The F**king Shit, aka STFS, out of precious metals in the middle of surging currency volatility and monetary policy chaos...)
Thank The Market Gods for Janet Yellen... Stocks were rescued back above their 100DMAs to prove everything is fine...which dragged all stock indices back into the green post-QE3
The big news was Gold & Silver crushed... Crude new cycle lows... and Swiss Franc slapped hard and put away wet... (oh and stocks bounced)
This rant, with some excellent charts, showed up on the Zero Hedge Internet site at 4:06 p.m. EST yesterday afternoon---and the first person through the door with this story was Dan Lazicki.
Call it 529 words of gibberish and be done!
All of the FOMC’s platitudes about the economy “expanding at a solid pace”, labor market conditions which have “improved further”, household spending which is “rising moderately” and business fixed investment which is “expanding” are not simply untruthful nonsense; they are a smokescreen for the Fed’s actual intention. Namely, to keep the Wall Street gamblers in free money in the delusional hope that ever rising stock prices will generate a trickle down of “wealth effects” in the main street economy.
But in equivocating still another time about when they intend to get the Fed’s big fat ZIRP thumb off the money market, the denizens of the Eccles Building have shown their true colors. The FOMC is not really comprised of economists or central bankers. It is simply a groupthink posse of spineless cowards who are petrified of a Wall Street hissy fit—–and are therefore willing to dispense whatever spurious word clouds they judge may be necessary to keep the gamblers hitting the “bid” until the next meeting.
David sounds miffed! This rant appeared on his website yesterday sometime---and it's the second offering of the day from Dan Lazicki.
The surging dollar, which has reached multi-year highs against a range of currencies in recent weeks, is taking a hefty chunk out of many U.S. companies' earnings.
And that means pain for the economy as a whole, say Doug Oberhelman, CEO of Caterpillar, one of the companies affected.
"The rising dollar will not be good for U.S. manufacturing or the U.S. economy," he said in a conference call with analysts and investors Tuesday, The Wall Street Journal reports.
A strong dollar reduces the revenue earned by U.S. companies overseas, because that revenue is now worth less when converted from foreign currencies into dollars. An ascendant greenback also depresses U.S. companies' exports by making them more expensive in foreign currency terms.
This news story appeared on the moneynews.com Internet site at 7:20 a.m. EST on Thursday morning---and I thank West Virginia reader Elliot Simon for sending it along.
The Federal Reserve has declared economic growth "solid." But several new reports show most Americans are treading along a dangerous financial tightrope, where one slip could be devastating.
Nearly half of U.S. households — 47 percent — say they spend all of their income, go into debt or dip into savings to meet their annual expenses, according to an analysis of Fed survey data released Thursday by the Pew Charitable Trusts.
"They could not withstand a serious financial emergency," said Diana Elliott, a Pew research manager who co-wrote the analysis. "That really is the contrast to the macroeconomic story" of a recovering economy.
"Macro indicators tell us a lot, but they don't tell us what is specifically happening within families," she said.
No surprises here. This AP story showed up on the denverpost.com Internet site at 9:59 a.m. MST yesterday morning---and it's the first offering of the day from Manitoba reader U.M.
Forget The Hindenburg Omen and The Hilsenrath Omen, today we have the real deal as The Baltic Dry Index hits the ominous 666 level - the lowest print for this time of year on record.
Of course, just like with oil - this is brushed off as over-supply (not under-demand) and we are sure someone will opine how positive this drastic deflation of shipping rates is for global business... but still - this is the lowest print since September 2012 (and practically the lowest since the recession).
This tiny article, with two excellent charts, put in an appearance on the Zero Hedge website at 9:33 a.m. on Wednesday morning EST. It's courtesy of reader Brad Robertson.
Cuban President Raul Castro demanded on Wednesday that the United States return the U.S. base at Guantanamo Bay, lift the half-century trade embargo on Cuba and compensate his country for damages before the two nations re-establish normal relations.
Castro told a summit of the Community of Latin American and Caribbean States that Cuba and the U.S. are working toward full diplomatic relations but "if these problems aren't resolved, this diplomatic rapprochement wouldn't make any sense."
Castro and U.S. President Barack Obama announced on Dec. 17 that they would move toward renewing full diplomatic relations by reopening embassies in each other's countries. The two governments held negotiations in Havana last week to discuss both the reopening of embassies and the broader agenda of re-establishing normal relations.
Obama has loosened the trade embargo with a range of measures designed to increase economic ties with Cuba and increase the number of Cubans who don't depend on the communist state for their livelihoods.
This AP story, filed from San Jose, Costa Rica, found a home on the Thailand Internet site thaivisa.com on Wednesday sometime---and I thank South African reader B.V. for finding it for us. It's certainly worth skimming.
U.K. economist and anti-austerity campaigner Michael Burke rejected Carney’s claim that Britain had escaped its debt trap. The former Citibank economist said Britons remain deep in debt, and that people are borrowing more than ever.
“Mark Carney is delusional if he thinks Britain and the U.S. have found a way out of the debt trap,” Burke told Russia Today.
“They have transferred debt, from companies to households. Household debt in both countries is among the highest in the world.”
Speaking in Dublin, Carney sharply criticized austerity policies common to the Eurozone states, warning the single-currency area was constrained by strangulating levels of debt that could plunge it into years of stagnation.
This article was posted on the Russia Today website at 2:44 p.m. Moscow time on their Thursday afternoon, which was 6:44 a.m. in New York---and it's the second story in a row from reader B.V.
A senior Bank of England official has compared banks' failures to prevent Libor and foreign exchange rigging to a fighter pilot ignoring safety checks, saying it should be in the banks' own interests to stamp out bad behaviour.
Andrew Hauser, the BoE's director of markets strategy, said ensuring good conduct had become misaligned with profitability at banks, causing systematic failures that led to traders ripping off customers in an attempt to make money.
He said that despite an "enormous" focus on improving standards at many banks, promises to reform could become like a quickly-forgotten new year's resolution if rules are not put in place to make sure it is in a bank's best interests to do so.
This story was posted on the telegraph.co.uk Internet site at 1:42 p.m. GMT on their Thursday afternoon---and I found it embedded in a GATA release.
Britain has summoned the Russian ambassador to explain why two Russian long-range bombers flew over the English Channel on Wednesday, dangerously close to passenger planes.
The Typhoon fighters were scrambled to escort the long-range Russian Bear planes – which are capable of carrying nuclear weapons – out of the U.K.'s “area of interest”.
Sources said the Russian planes were flying without their transponders turned on, making them invisible to civilian aircraft. A number of flights arriving in Britain had to be diverted to avoid potential disaster.
The unwelcome visit was part of an "increasing pattern of out-of-area operations by Russian aircraft", according to the Foreign Office.
This news item appeared on The Telegraph's website at 6:36 p.m. GMT yesterday---and I thank Casey Research's own Louis James for passing it around yesterday.
When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!
Ironically, all this will achieve is delay the Peg breach by a few weeks. If anything, the Danish central bank is merely confirming that while it hasn't sounded an all out retreat from currency wars, like the Swiss and Singapore banks did recently, it is in furious retreat and it is only a matter of time at this point.
Yep, another euro peg about to bite the dust. I'm taking bets as to what day in February it will be.
This story showed up on the Zero Hedge website at 10:13 a.m. EST on Thursday morning---and it's the second contribution of the day from reader U.M.
Germany has succumbed to deflation for the first time in more than five years, and may not see inflation again before the year is out.
Inflation fell below zero for the first time since October 2009, according to preliminary estimates from statistics agency Destatis, as prices dropped by 0.3pc in the year to January.
Analysts had expected deflation - but not at this pace. A poll suggested that prices would fall by just 0.2pc in the period. Final results for January will be published on February 12.
There are fears that prices may continue to fall for some time. Michala Marcussen, of Societe Generale, said: "German inflation should not turn positive before the final quarter of 2015."
This article showed up on the telegraph.co.uk Internet site at 1:05 p.m. GMT on their Thursday afternoon---and my thanks go out to Roy Stephens for sending it.
Six decades ago, an agreement to cancel half of postwar Germany's debt helped foster a prolonged period of prosperity in the war-torn continent. The new government in Athens says Greece – and Europe – now need a similar deal.
When discussing Greece’s whopping $310 billion debt, the country's new Prime Minister Alexis Tsipras likes to recall a time when Europe's great debt offender was not Greece, but Germany, today's paragon of fiscal responsibility. The leader of the radical-left Syriza party refers in particular to an international conference held in London in 1953, during which West Germany secured a write-off of more than 50% of debt, accumulated after two world wars. Back then, with memories of Nazi atrocities still fresh, many countries were reluctant to offer such generous debt relief. But the US persuaded its European allies, including Greece, to relinquish debt repayments and reparations in order to build a stable and prosperous Western Europe that could contain the threat from Soviet Russia.
“Tsipras is right to remind Germans how well they were treated, with both debt relief and money from the Marshall Plan,” says Professor Stephany Griffith-Jones, an economist at Columbia University, referring to the US programme to help rebuild European economies after World War II. She believes Greece is justified in demanding a more generous approach from its creditors, despite obvious differences between its current plight and that of war-ravaged Germany. “In fact, Greece’s situation is perhaps more urgent because the pressure from markets and the financial sector is so much stronger than in the 1950s,” she says.
This very interesting article appeared on the france24.com Internet site yesterday Europe time---and it's worth reading. I thank reader B.V. for digging it up on our behalf.
Most of you, dear [German] readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.
In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.
In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.
This absolute must read commentary appeared on the Zero Hedge website at 10:27 a.m. EST on Thursday morning---and the first reader through the door with it was our man in Greece, Harry Grant.
Markets have woken up to Greek nuclear risk. Bank stocks on the Athens exchange have crashed 44pc since Alexis Tsipras swept into power this week with a mandate to defy the European power structure.
Greek bonds bought with such zest by investors last April - entranced by the mirage of recovery, and deaf to simmering revolution below - are signalling a rapid slide towards bankruptcy. Five year yields spiked to 13.5pc today.
Contrary to expectations, Mr Tsipras has not resiled from a long list of campaign pledges that breach the terms of Greece's EU-IMF Troika Memorandum, and therefore put the country on a collision course with the Brussels, Berlin, and Frankfurt.
He told his cabinet today that the government is willing to negotiate on its demands for debt relief but will not abandon its core promises to the Greek people. “We will not seek a catastrophic solution, but neither will we consent to a policy of submission. The country is holding up its head,” he said.
Ambrose Evans-Pritchard picks up the Greece story---and runs with it in this article that appeared in The Telegraph at 8:25 a.m. GMT yesterday morning. It's definitely worth reading---and I thank Roy Stephens for sharing it with us.
Speaking in May 2014 (ahead of Ukraine's elections) new Greek Prime Minister Alexis Tsipras made very clear why he is now against Germany's push for further sanctions against Russia.
[The SYRIZA] party believes that the new government in Ukraine came to power as a result of a coup, and call it a junta.
"We should not accept or recognize the government of neo-Nazis in Ukraine," the Athens News Agency quotes Tsipras who believes that the Ukrainian people should decide their future themselves.
Speaking about different peoples' movements for self-determination, Tsipras said that the European left respected the right to self-determination, but nationalism and clashes could not lead to positive results.
"We in the E.U. should not give preference to changing borders, but must respect the position of the peoples, who have decided to create a Federation within the state," said the SYRIZA leader.
This short, but interesting commentary appeared on the Zero Hedge website at 6:51 p.m. EST yesterday evening---and it's definitely worth reading as well, as is the embedded link to the original story from 2014. It's another offering from reader B.V.
The new Greek government has agreed to impose more EU sanctions on Russia, while defending its right to shape European foreign policy.
Foreign ministers in Brussels on Thursday (29 January) extended the Russia blacklist for six months, promised to add extra names, and began preparations for a fresh round of economic sanctions.
The new names - individuals and entities - are to be added by 9 February at the latest.
Leaders will decide whether to move ahead on economic sanctions most likely at a summit in mid-March.
This was a surprise! I wonder what Moscow thinks now? This article appeared on the euobserver.com Internet site just after midnight Europe time this morning---and I thank Roy Stephens for sliding it into my in-box just after midnight Denver time.
We suggested the Greek pivot from Europe to Russia was building previously, and now, we get confirmation from Russia's finance minister Anton Siluanov that the pivot could be mutual, who told CNBC in the interview below:
With fire and brimstone spewing from Germany over the potential for Greece to veto any and everything, it seems Russia may just have stymied Europe's leverage over the newly democratic nation.
It appears, in Russia, Greece has found another possible friend...
Siluanov: "if such a petition [for financial aid] is submitted to The Russian Government, we will definitely consider it."
You need a program to keep up to the changes---and I get the feeling that we ain't seen nothing yet. He reminds of JFK back in the 60s---and we should hope and pray that they don't have a "grassy knoll" incident in Athens. This Zero Hedge piece appeared on their website at 1:43 p.m. on Thursday---and it's another contribution from reader U.M.
In less than three hours, Belarus President Aleksandr Lukashenko learned a painful lesson in the language of bond markets.
After sparking a record sell-off in the former Soviet republic’s bonds by raising the prospect of “restrukturizatsiya” -- Russian for restructuring -- of debt, Lukashenko attempted to restore investor calm by saying the word he really meant to use was “refinansirovanie,” or refinancing. While the clarification helped pare the size of the rout, the nation’s $1 billion of bonds due this August still lost 12.4 cents on the dollar, leaving the yield at 47.53 percent, three times higher than it ended Wednesday.
“The mounting uncertainty about the fallout from Russia’s financial crisis across the entire CIS region naturally increases investors’ sensitivity to negative news flow,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by e-mail. “Volatility has returned with a vengeance.”
This Bloomberg news story showed up on their website at 3:09 a.m. Denver time yesterday morning---and it's courtesy of Elliot Simon.
Washington’s attack on Russia has moved beyond the boundary of the absurd into the realm of insanity.
The New Chief of the U.S. Broadcasting Board of Governors, Andrew Lack, has declared the Russian news service, Russia Today, which broadcasts in multiple languages, to be a terrorist organization equivalent to Boko Haram and the Islamic State, and Standard and Poor’s just downgraded Russia’s credit rating to junk status.
Today Russia Today International interviewed me about these insane developments.
In prior days when America was still a sane country, Lack’s charge would have led to him being laughed out of office. He would have had to resign and disappear from public life. Today in the make-believe world that Western propaganda has created, Lack’s statement is taken seriously.
This longish, but absolute must read commentary by Paul showed up on his website on Monday---and I thank reader M.A. for sending it along.
Six hundred and sixty kilometers of the new Turkish Stream pipeline will go through the old South Stream corridor and a further 250 kilometers will head in the direction of the European part of Turkey.
The four threads which make up the pipeline will have a capacity of 63 billion cubic meters, Gazprom said in a statement following Tuesday’s meeting between CEO Aleksey Miller and the Turkish Minister of Energy and Natural Resources Taner Yildiz.
The company will apply to carry out design and exploration work in Turkish territorial waters on Wednesday, January 28.
This article was posted on thetoc.gr website on Tuesday---and it's courtesy of Brad Robertson.
Something bizarre is happening on Turkey’s accounting books, and nobody’s quite sure why.
Turkey attracted $7.9 billion of income from unexplained sources during the first eight months of 2014, compared to an outflow of $90 million during the same period a year ago, according to the central bank data. In the three months that followed, $5.6 billion of that left the country.
Unexplained flows of foreign funds into and out of the economy -- marked as “net errors and omissions” in Turkey’s Balance of Payments report -- showed violent swings during the first 11 months of 2014. Outflows in November were estimated to be $3.46 billion, the biggest monthly exodus in more than 16 years, according to central bank data.
This interesting article put in an appearance on the Bloomberg Internet site at 10:18 p.m. MST on Wednesday evening---and it's the final offering of the day from Elliot Simon.
The pilots of AirAsia Bhd. Flight 8501 cut power to a critical computer system that normally prevents planes from going out of control shortly before it plunged into the Java Sea, two people with knowledge of the investigation said.
The action appears to have helped trigger the events of Dec. 28, when the Airbus Group NV A320 climbed so abruptly that it lost lift and it began falling with warnings blaring in the cockpit, the people said. All 162 aboard were killed.
The pilots had been attempting to deal with alerts about the flight augmentation computers, which control the A320’s rudder and also automatically prevent it from going too slow. After initial attempts to address the alerts, the flight crew cut power to the entire system, which is comprised of two separate computers that back up each other, the people said.
While the information helps show how a normally functioning A320’s flight-protection system could have been bypassed, it doesn’t explain why the pilots pulled the plane into a steep climb, the people said. Even with the computers shut off, the pilots should have been able to fly the plane manually, they said.
This news item was posted on the Bloomberg website at 11:20 p.m. MST on Wednesday evening---and I thank Dan Lazicki for finding it for us. The original headline read "Indonesia won't publish preliminary report on Airasia jet probe".
Latest USGS figures show that production of gold by U.S. mines was 540,000 ounces (16.8 tonnes) in October, a 6% decrease compared with September output and an 11% decrease compared with that of October 2013 (See table below). Year on year U.S. gold output is down by 7.4%, continuing the decline seen a year earlier. The U.S. is the world’s fourth largest gold producer, after China, Australia and Russia, but is not in danger of losing its place as South Africa, the world’s fifth largest producer in 2013, is some way behind, and production there will also probably be down on a year earlier. However the gap is widening between the U.S. and the three countries above it which are all likely to show increases in gold output in 2014 compared with 2013 when the final 2014 figures are all collated. On the basis of the USGS figures to date, U.S. total gold production for the year is likely to be in the order of 211 tonnes as compared with 230 tonnes a year earlier.
The USGS also produces some interesting data on the destinations of U.S. gold exports. The top four recipients of U.S.-produced gold in October were: Switzerland with 17.6 tonnes, Hong Kong with 12.9 tonnes, mainland China with 7.4 tonnes and India which took in 6.1 tonnes. Other significant recipients were Thailand (2 tonnes), the U.K. (2 tonnes), the UAE (1.36 tonnes) and Singapore with 1 tonne.
This latest USGS data are thus also particularly interesting for China watchers as they would seem to confirm that a significant amount of gold is being imported directly via the Chinese mainland ports of entry rather than just by the old primary route through Hong Kong, although the latter still remains the larger destination. For comparison, in October 2013 only 0.36 tonnes were shipped direct to China and 17.8 tonnes to Hong Kong. This year’s figures thus represent a substantial change which we have commented on in other articles on Chinese total gold demand and the lower Hong Kong export figures seen last year. The gold exported to Switzerland will have mostly been destined to be remelted into kilo bars and shipped onwards – primarily again to China both via Hong Kong and directly.
This very interesting commentary by Lawrie appeared on the mineweb.com Internet site yesterday---and is certainly worth reading. I thank reader U.M. for bringing it to our attention.
With his meticulously documented report yesterday about the close connection between the auxiliary gold vault of the Federal Reserve Bank of New York and the vault area of the adjacent JPMorgan Chase & Co. building, GATA consultant Ronan Manly was pretty cautious:
Manly noted the claim made by the CME Group, operator of the New York Commodity Exchange, that documents about the vault in possession of the U.S. Commodity Futures Trading Commission should be exempt from federal disclosure law, and he speculated that the only statutory provisions for such exemption might be for national defense and foreign policy issues.
Manly was probably understating the situation. That is, it seems fair to conclude that the New York Fed has set up its gold vaults this way so that gold leaving its custody for sensitive market intervention or embarrassing repatriation can depart by the back door rather than by the front door, can depart disguised as the business of a commercial bank rather than be exposed as official business.
I found this brief gold-related story on the gata.org Internet site yesterday.
In a day in which silver was pounded the most since September 2013 without any fundamental reason to explain this weakness (aside for the extensively discussed Precious Metals-USDJPY funding pair trade, so favored by the central banks to punish gold/silver while pushing risk higher), many are wondering: what was the reason for this crash?
Well, in a day in which Yellen now openly advised Democrats in a non-public setting about Fed policy, is it that ludicrous to assume that someone leaked the following announcement made after the close by the CME, namely that silver margins were just hiked by 11%?
I would guess that this margin increase was further pressure on the leveraged longs to cover their positions and get out of the market so that JPMorgan et al could buy them. This brief Zero Hedge article appeared on their website at 4:48 p.m. EST yesterday afternoon---and it's the last offering of the day from Dan Lazicki.
If, as Kyle Bass so eloquently noted previously, "buying gold is just buying a put against the idiocy of the political cycle. It's That Simple," then recent (post-QE3) activity suggests the narrative is changing fast...
Perhaps Larry Summers was right last week in Davos, "we have to recognize that the era when central bank improvisation can be the world’s growth strategy is coming to an end."
That's all there is to this tiny Zero Hedge piece that appeared on their website at 9:27 a.m. EST yesterday---and the embedded chart is worth a look. It's another offering from Manitoba reader U.M.
Underlying physical demand is starting to pick up in 2015 and will "give the market longer-term ballast" although more headwinds remain before a return to a bull market, analytical company GFMS said Thursday.
In conjunction with Thomson Reuters, GFMS said in its Gold Update 2 report that professional investors are absent as the dollar "remains king. Fresh professional investment is unlikely much before there is clarity on the Fed's timing over rate hikes."
Continued monetary easing in Europe, Japan and China will support the dollar in the medium term, pointing away from gold investment, "especially as US equities, on an historical multiple at least, are not over-extended."
I'm no fan of anything that GFMS says, but in the interest of fairness I thought I should post it. This article, filed from London, showed up on the platts.com Internet site at 2:43 p.m. GMT yesterday---and I thank reader U.M. once again for sending it along.
Despite the lower gold price, global mine production continued to grow last year, increasing 2% to an all-time high of 3,109 t, the latest survey by GFMS showed.
However, total physical demand fell 19% in 2014 as all areas, with the exception of official sector purchases, registered declines.
GFMS attributed the growth in output to production strategies aimed at reducing unit costs and production growth from large projects – the “legacy of investments” made during high-price periods – brought online or ramped up.
Global scrap supply declined almost 11% last year to an estimated 1,122 t – in line with the 10.3% fall in the dollar gold price – with East Asia bucking the trend with growth of 4%.
One has to wonder if this story is referring to the same GFMS story in the previous posting above, as at no point do they even sound similar or mention the same things. I'll leave it to you to sort out, dear reader. This article, filed from Johannesburg, put in an appearance on the miningweekly.com Internet site yesterday---and I thank South African reader B.V. for his final offering in today's column.
Whether it is investing, taking advantage of the biggest gold and jewellery promotion, or getting one’s hands on designed products imported from over 30 countries, gold and jewellery has proven to be one of Dubai Shopping Festival’s (DSF) major attractions.
After an overwhelming response received by gold and jewellery shoppers this DSF, Dubai Gold and Jewellery Group (DGJG) said the 20th edition of DSF has greatly contributed to the drastic push in the gold sector raising average gold sales 25-30 per cent at all the participating outlets.
The enormity of prizes, giving people a chance to win up to 100kg of gold and 40 carats of diamonds, including the chance to buy a link in a world breaking longest chain could be one of the main reasons why many shoppers have been flocking to gold shops and to the Gold Souq to purchase gold and jewellery.
Overall demand for jewellery in Dubai has been steadily increasing, but since it is home to the largest Indian expat population, who values gold and considers it as the best way to invest their savings, this has also played a significant role in boosting gold jewellery sales on a larger scale during festive seasons like DSF.
This very interesting story, filed from Dubai, appeared on the gulfnews.com Internet site at 7 p.m. Gulf Standard Time yesterday evening, which was 10 a.m. EST. Once again it's courtesy of reader U.M.
For the recent two years Kazakhstan’s Central Bank has been buying all the fine gold produced in the country, Tengrinews.kz reported, citing Albert Rau, Minister for Investments.
“Given the turbulent global economy condition, the National Bank has been buying out all the fine gold produced (…) annual production output stands at 22 tons a year”, Mr. Rau said, when presenting a draft law on precious metals and gems in the country’s Majilis (lower chamber).
“As a rule, prices for gold grow amidst growing demand (…) the latter is normally driven by volatility of major currencies. Currently, the keen interest to gold is assigned to the weakening Euro. Gold is seen as a stable harbor”, he elaborated.
This very interesting gold-related article appeared on the linkis.com Internet site on Wednesday sometime---and it's worth reading, as we don't get too much gold news from this area of the world. Once again I thank reader U.M. for finding this story for us.
India customs seized 365kg gold worth Rs 1 billion at Chennai airport till December 2014 as against 113kg worth Rs 350 million in 2013.
The increase in seizure is due to high surveillance. We seized gold from passengers, from planes and airport building. More personnel will be inducted into customs at airport and cargo soon. Additional manpower has been sanctioned,” said S Ramesh, chief commissioner of customs, Chennai, after inaugurating a sensitization programme for customs personnel and staff of other agencies organized to mark International Customs Day on Tuesday.
The airport is popular among gold smugglers because of the good connectivity to Singapore, Kuala Lumpur, Colombo and Dubai from where majority of the smuggled gold is sourced.
This short item was posted on the customstoday.com.pk Internet site yesterday---and it's the final story of the day from Manitoba reader U.M.---and I thank her on your behalf.
India overtook China as the world's biggest gold consumer in 2014 as global physical demand fell, an industry report showed on Thursday, forecasting that prices that have declined for the last two years would bottom out this year.
Chinese gold demand slid by more than a third last year to a four-year low of 866 tonnes, while the country's scrap gold supply rose 21 percent to an unprecedented 182 tonnes, the report by GFMS analysts at Thomson Reuters showed.
Slower economic growth and a crackdown on corruption helped knock Chinese jewellery demand to 608 tonnes, 33 percent below the previous year's "extraordinary" levels, it said. Physical bar demand fell 53 percent to 171 tonnes, a five-year low.
"We do expect an increase in Chinese demand this year. However, without a dramatic course of events we would not expect it to come close to matching the level in 2013," GFMS analyst Ross Strachan said.
Another story---and another reference to that GFMS report. This one, a Reuters piece filed from New Delhi, appeared on the rediff.com Internet site at 8:05 p.m. IST---and it's courtesy of reader M.A.
Latest statistics from the USGS make for interesting reading – not because they show U.S. gold output has been continuing to fall – it’s down 7.4% year on year to date – but for the country by country export data. We have been commenting on Mineweb.com for much of this year that imports to mainland China via Hong Kong remain significant, but by no means as significant as in the past. We have come up with this viewpoint through extrapolation of Chinese Shanghai Gold Exchange data which has been high – particularly in the final quarter of the year – even while net gold imports from Hong Kong have slipped sharply. That's an anomaly that is hard to explain unless substantial gold imports are coming in by other routes.
But I’ve just received some interesting statistical data from the USGS which shows that a substantial proportion of U.S. gold exports to Hong Kong and China in October went directly to the mainland. The figures were 12.9 tonnes to Hong Kong and 7.4 tonnes directly to the mainland – or 36%. This ties in remarkably well with our opinions on the breakdown of Chinese gold imports and that while Hong Kong remains a significant import route it is not nearly so important in the overall picture as it used to be. By contrast, in October 2013, only 0.36 tonnes were shipped direct to the mainland and 17.8 tonnes to Hong Kong. A very substantial change indeed.
This short article by Lawrie dovetails nicely with the first gold-related story of the day---and he posted it on his own website lawrieongold.com yesterday.
Some are calling the blizzard a likely bust, and National Weather Service's meteorologist Gary Szatkowski apologized on Twitter, saying they didn't get it right.
This 1:42 minute video clip appeared on the cbsnews.com Internet site at 8:32 a.m. EST on Tuesday morning---and today's first news item is courtesy of West Virginia reader Elliot Simon.
For 73 months running the Fed has lashed the money markets to the gross financial anomaly of ZIRP. Never before in the history of the world has any central bank or other monetary authority decreed that overnight money shall be indefinitely free to gamblers or that liquid savers should have their hard earned wealth chronically confiscated by negative returns after inflation and taxes. And, needless to say, never have savers and borrowers in a free market struck a bargain night after night after night at 0% for six years running, either.
Yet now comes another Fed meeting and announcement that our monetary overlords will be “patient” with zero cost money for several more meetings. Indeed, there are even hints that the era of ZIRP could extend beyond mid-summer—that is, for more than 80 months.
So an urgent question screams out. Don’t these obstinate zealots realize that zero cost overnight money has only one use, and that is to fund the carry trades of Wall Street gamblers?
Accordingly, are they not even more culpable than Longfellow’s skipper, who perished along with the fair daughter he lashed to his ship’s mast because he insouciantly belittled a ferocious storm made by nature? By contrast, these benighted folks at the Fed are actually fueling their own hellish financial storm, thereby leaving in mortal danger the main street economy which they, too, have foolishly nailed to the mast of ZIRP.
This commentary by David appeared on his website yesterday sometime---and I thank Roy Stephens for sending it. It's worth reading.
Many economists have expressed enthusiasm about the European Central Bank (ECB)'s 1.1 trillion euro quantitative easing (QE) program announced last week. Stephen Roach, a senior lecturer at Yale's School of Management, wasn't one of them.
"In the QE era, monetary policy has lost any semblance of discipline and coherence," Roach, former chairman of Morgan Stanley Asia and the firm's chief economist, writes in an article for Project Syndicate.
"As [ECB President Mario] Draghi attempts to deliver on his commitment [to protect the euro], the limits of his promise — like comparable assurances by the Fed and the Bank of Japan — could become glaringly apparent. Like lemmings at the cliff’s edge, central banks seem steeped in denial of the risks they face," he notes.
Lemmings? I like the way this guy thinks. It was an article that appeared on the newsmax.com Internet site at 6:00 a.m. EST yesterday morning---and it's the second offering of the day from Elliot Simon.
Republican U.S. Sen. Rand Paul, a potential 2016 presidential candidate, on Wednesday re-introduced a bill that would expose the Federal Reserve's monetary policy discussions and decisions to a congressional audit.
The Kentucky senator's move to re-introduce the bill, along with 30 co-sponsors, comes as Republican lawmakers and some Democrats increase their efforts to rein in the U.S. central bank and make it more transparent.
The Fed gained broad regulatory powers and implemented massive stimulus measures after the 2007-2009 financial crisis, expanding its balance sheet to $4.5 trillion.
Republican U.S. Rep. Thomas Massie of Kentucky introduced a similar bill in the House of Representatives this month.
This Reuters article put in an appearance on their Internet site at 4:28 p.m. EST on Wednesday---and I found it embedded in a GATA release.
Who can forget the farce conducted by Canada's labor statistics office back in August when, as we reported, "Canada Releases Atrocious Jobs Data; Then Revises It Above The Highest Estimate Following Public Outcry." It was then that we got our first hint that when it comes to massaging data, Canada is on par with China and even the US.
Well, Statistics Canada just outdid itself moments ago when it reported that those 185,700 jobs gains it had previously reported for all of 2014... well, it was only kidding, and after a second look, the number has been revised a whopping 35% (!) lower to only 121,300. How long until a light bulb goes over the BLS' head and the US department of seasonal adjustments decides to do the same?
This Zero Hedge article appeared on their website at 8:47 a.m. EST yesterday---and I thank Dan Lazicki for sending it our way.
The recent decision by the European Central Bank to open the monetary floodgates has weakened the euro and is boosting the German economy. But the move increases the threat of turbulence on the financial markets and could trigger a currency war.
The concern could be felt everywhere at this year's World Economic Forum in Davis, the annual meeting of the rich and powerful. Would the major central banks in the United States, Europe and Asia succeed in stabilizing the wobbling global economy? Or have the central bankers long since become risk factors themselves? The question was everywhere at the forum, being addressed by experts at the lecturns and by participants in the hallways.
Central banks, said Harvard University economics professor Kenneth Rogoff, are surely the greatest source of uncertainty in the eyes of the financial markets, a statement that was not disputed by others on the panel. The fact that monetary policies at central banks in the US, Europe, Japan and elsewhere are drifting apart poses a major risk for the stability of financial markets, he said.
"It's important for the international community to work together to avoid currency wars which no one can win," Min Zhu, deputy managing director of the IMF, told the conference.
This longish commentary is worth reading if you have the time. It was posted on the German website spiegel.de at 11:08 a.m. Europe time on their Wednesday morning---5:08 a.m. EST. It's the contribution of the day from Roy Stephens.
Greek default risk has surged in recent days and today as it becomes clear what Syriza expects from Europe, short-term CDS are at post-crisis highs with 5Y CDS implying a 76% probability of default (based on standard recovery assumptions - which may be a little high in this case). Given the domestic bank dominance in the buying of domestic government debt, Greek banks are getting hammered as everyone's favorite hedge fund trade is an utter bloodbath. Greek stocks overall are down and GGBs are tumbling once again - back at 16 month lows (given back all the ECBQE hope bounce). Perhaps not surprising moves, given new Greek Finance Minister Yanis Varoufakis reality-exposing comments yesterday, "the problem with the bailout is that it wasn’t really a bailout... it was an extend and pretend, it was a vicious cycle, a debt-deflationary trap, which destroyed our social economy."
This short article, chock full of charts, is definitely worth your time---and it was posted on the Zero Hedge Internet site at 10:14 a.m. EST yesterday---and it's another contribution from Dan Lazicki.
In his first act as prime minister on Monday, Alexis Tsipras visited the war memorial in Kaisariani where 200 Greek resistance fighters were slaughtered by the Nazis in 1944.
The move did not go unnoticed in Berlin. Nor did Tsipras's decision hours later to receive the Russian ambassador before meeting any other foreign official.
Then came the announcement that radical academic Yanis Varoufakis, who once likened German austerity policies to "fiscal waterboarding", would be taking over as Greek finance minister. A short while later, Tsipras delivered another blow, criticising an E.U. statement that warned Moscow of new sanctions.
The assumption in German Chancellor Angela Merkel's entourage before Sunday's Greek election was that Tsipras, the charismatic leader of the far-left Syriza party, would eke out a narrow victory, struggle to form a coalition, and if he managed to do so, shift quickly from confrontation to compromise mode.
No surprises here. This absolute must read Reuters article, filed from Berlin, appeared on their website at 1:29 p.m. EST yesterday afternoon---and I thank Harry Grant, our man in Greece, for bringing it to my attention---and now to yours.
The Parliamentary Assembly of the Council of Europe (PACE) has decided not to restore Russia’s voting rights until April. Moscow was first stripped of its rights in PACE after Crimea joined Russia last year.
In turn, Aleksey Pushkov, the chief of Russia’s PACE delegation and chairman of the State Duma's Foreign Affairs Committee, said: “We are exiting PACE until the end of the year.”
“As PACE stripped Russia of the right to vote in its governing bodies, we can no longer speak of any contacts with the organization,” he explained.
This news item, also from Russia Today, was posted on their Internet site at 7:23 p.m. Moscow time on their Thursday evening---and was edited early this morning Moscow time. Once again I thank Roy Stephens for sharing it with us.
The Ukraine conflict can only be solved with Moscow at the table, but the West has taken away one of the few forums where the issue could be discussed, political analyst Martin McCauley told Russia Today, speaking on PACE’s decision to strip Russia's voting rights.
RT: Did you expect PACE to uphold the suspension of Russia’s voting rights?
Martin McCauley: I was rather surprised because it was a very split decision – 35 to 34. The assembly was obviously split right down the middle with the majority of one, so it could have gone either way. And as one of the delegates said, this is a negative move because if you want to enter dialogue with Ukraine, you must have Russia there as a partner.
The Ukrainian crisis cannot be solved without Russia. And therefore the Parliamentary Assembly of the Council of Europe is one of the forums for that. And this now ceases, and therefore there is one forum less. And one can look forward, hopefully, that Russia would come back to the debating chamber and present its point of view. But it does not look like that, because Russia may, in fact, give up on the Council of Europe for this year.
This short interview showed up on the Russia Today website at 2:47 a.m. Moscow time on their Thursday morning---and it's also courtesy of Roy Stephens. It's worth reading.
When Aleksandr Lapko received his drafting notice from the Ukrainian defence ministry, he was faced with a dilemma: either spend $2000 of his own money (the equivalent of 10 average monthly wages in the military) to buy the military equipment needed to serve, or pay a $2000 bribe to be declared medically unfit for service.
He chose the first option and is now working with the NATO liaison office in Ukraine.
This story, published by Transparency International, captures in a nutshell the challenges faced by Ukrainians in their daily struggles: either pay from their own money to cover for the endemic corruption of officialdom, or bribe their way out of a rut.
This malaise has become so prevalent that Ukrainians barely shrugged when Prime Minister Yatsenuk said earlier this year that 40 percent of all state procurements are lost each year to graft.
This very interesting---and sadly true opinion piece appeared on the euobserver.com Internet site at 5:36 p.m. Europe time on their Wednesday afternoon---and it's another article that Roy dug up for us.
Russia’s Federal Migration Service said on Wednesday it has extended the period of sojourn in Russia for Ukrainian citizens of the recruitment age for more than 90 days.
"Under the current rules, Ukrainian citizens of this category are allowed to stay in Russia less than 90 days. In case of overstaying, they are to face administrative charges. Being guided by humanitarian considerations, Russia’s Federal Migration Service has taken a decision to extend terms of sojourn for the above mentioned categories of Ukrainian citizens," the press service of the Federal Migration Service said.
According to the service’s statistics, more than 2.430 million Ukrainian citizens are currently staying in Russia, of whom 1.172 million are men of recruitment age. Apart from that, more than 800,000 forced migrants from eastern Ukraine have found shelter in Russia.
This is another very interesting article---and it was filed from Moscow---and posted on the itar-tass.com Internet site at 9:38 p.m. yesterday evening local time. The stories from Roy just keep on coming.
European natural gas consumers need to prepare the infrastructure needed to avoid Ukrainian territory by 2019, an official from Russia's Gazprom said Wednesday.
Europe gets about a quarter of its natural gas needs met by Russian suppliers, though the majority of that runs through a Soviet-era transit network in Ukraine. Simmering conflict, and gas contract issues reaching back to at least 2006, exposes that artery to risk.
The Kremlin has worked to advance transit networks that avoid Ukrainian territory, most recently with Turkish Stream, a revamped project that replaces the now-scrapped South Stream pipeline. By 2019, Ukrainian networks will be idle and Gazprom Chairman Viktor Zubkov said Europe needs to be ready.
"Considering the decision made on re-directing supplies from 2019, European partners do not have so much time [for infrastructure preparation]," he said from a European gas conference in Vienna.
This UPI news item, filed from Vienna, appeared on their Internet site at 6:19 a.m. EST Wednesday morning---and once again it's courtesy of Roy Stephens.
Russian Prime Minister Dmitry Medvedev has signed a one-year anti-crisis plan designed to stabilize the economy. The document includes 60 measures and will cost at least $35 billion (2.3 trillion rubles).
The final cost hasn’t yet been calculated but the official statement published Wednesday shows that as for now the Government is going to spend about $35 billion, which also includes the $15 billion (one trillion rubles) bailout for Russian banks agreed last year.
Last Friday, Russia’s Agency for Deposit Insurance approved a list of 27 lenders that will get the bailout money including VTB Group ($4.5 billion, which is around 310 billion rubles), Otkrytie group ($1 billion or 65.1 billion rubles) and Vnesheconombank (VEB) ($300 million or 20.4 billion rubles).
As part of the plan, Russia will also create a bank for ‘bad debt’ that will collect corporate debt and problematic company assets.
This news items appeared on the Russia Today website at 11:38 a.m. yesterday morning Moscow time---and once again I thank Roy Stephens for digging it up for us.
One of the greatest foreign policy blunders of the Obama Administration was the push by the U.S. for economic sanctions against Russia. That led to Russia fleeing into the arms of China for refuge. In response, Russia, Europe’s largest and most populated country, is now intent on moving its vast storehouse of resources eastward, strengthening America’s largest emerging rival.
Over the last two years, the two countries have completed a $700 billion agreement for Russia to deliver energy to China, amounting to about 17% of Chinese annual supply, for a period covering twenty years, with China financing much of the initial costs of pipeline construction.
What Russia has done, in that one move, is to help repair a major hole in China’s military armor, making it invulnerable to a U.S. cut-off of sea-born energy supplies, which until now was one of the greatest fears of Chinese military strategists.
From the Chinese perspective, this is a gift that fulfills its wildest dreams. It’s also a gift that could severely undermine the West's plans to deliver expensive Liquified Natural Gas (LNG) to China and Asia, while already facing competition from Qatar and Australia LNG, will now also run up against Russian pipeline gas through China.
This must read essay appeared on the oilprice.com Internet site this past Sunday---and I thank Casey Research's own Bud Conrad for passing it around early yesterday morning.
The Chinese currency is the 5th most-used currency in international payments, according to the SWIFT network responsible for international financial transactions. Breaking into the top 5 is symbolic to balance dollar-denominated payments.
In 2014, yuan payments doubled by 102 percent, and increased by 20.3 percent in December alone, compared to the same time period last year, SWIFT said Wednesday. The yuan, or renminbi, surpassed the Canadian and Australian dollars.
"It is a great testimony to the internationalization of the renminbi and confirms its transition from an 'emerging' to a 'business as usual' payment currency," Wim Raymaekers, Head of Banking Markets at SWIFT said in a statement.
2.2 percent of all SWIFT payments made in December were yuan-denominated, according to the Brussels-based payment operator. Ahead of the yuan are the US dollar, euro, British pound, and Japanese yen, which has a 2.7 percent share.
This brief article was posted on the Russia Today website at 3:20 p.m. Moscow time yesterday afternoon---and is worth skimming. It's the second-last offering of the day from Roy Stephens.
Singapore unexpectedly eased monetary policy, sending the currency to the weakest since 2010 against the U.S. dollar as the country joined global central banks in shoring up growth amid dwindling inflation.
The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said in an unscheduled statement Wednesday it will seek a slower pace of appreciation against a basket of currencies. It cut the inflation forecast for 2015, predicting prices may fall as much as 0.5 percent.
The move was the first emergency policy change since one following the Sept. 11, 2001 attacks for the MAS -- which only has two scheduled policy announcements a year -- reflecting how the plunge in oil has changed the outlook in recent months. Singapore becomes at least the ninth nation to ease policy this month, as officials from Europe to Canada and India contend with escalating disinflation and faltering global growth.
This Bloomberg article, filed from Singapore, appeared on their Internet site at 5:28 p.m. Tuesday afternoon Denver time---and it's a story I found on the gata.org Internet site.
Shares of Brazilian state-run energy company Petrobras plunged 11.26% to $6.97 in morning trading Wednesday after it published its unaudited third-quarter results after a more than two-month delay but failed to include a dollar amount for a write-down tied to its ongoing and wide-reaching corruption scandal.
Petrobras reported net profit of 3.09 billion reais, or $1.18 billion, down from 3.39 billion reais in the same quarter last year. Revenue totaled 88.37 billion reais in the quarter, up from 77.7 billion reais. EBITDA fell 10% year-over-year to 11.7 billion reais.
"The company understands that it will be necessary to make adjustments at the financial statements to correct the values of fixed assets," said Petrobras, which added it would be "impracticable to correctly quantify these "improperly recognized values" related to the scandal "since the payments were made by external suppliers and cannot be traced back to the company's accounting records."
This news item appeared on thestreet.com website at 9:48 a.m. yesterday morning EST---and I thank Dan Lazicki for bringing it to our attention.
Given that gold ended 2014 nearly $200 higher than Goldman Sachs’ extremely bearish forecasts in 2014 – a forecast repeated several times during the year – and has since risen by nearly a further $100 since, the investment bank’s analysts have been forced to revise upwards their predictions for gold’s performance this year. But far from seeing much of an upturn, they have revised nearer term forecasts to take account of the current level as a matter of reality, but see gold turning down in Q3 – and falling back to $1,000/oz by end 2016. Thus its revised forecasts are for 3-, 6- and 12-month average gold prices at $1,290/oz, $1,270/oz and $1,175/oz but with a continuing downturn throughout 2016 down to the predicted $1,000 level by the end of that year. That’s even lower than the $1,050 year-end price initially predicted for 2014. Gold investors will surely hope the bank is way out yet again, but as we have pointed out before such forecasts from the world’s top investment bank tend to colour big money investor views accordingly.
Goldman’s reasoning is that their expectation of a continuing improvement in the U.S. economy will thus support general equities and make gold less attractive to investors as a result – indeed this is very much a continuation of the bank’s reasoning behind its bearish forecast for last year. The bank also notes that it expects cost of production to fall for the major miners as a result of lower oil prices across the board and local currency weakness against the U.S. dollar, in which gold sales are priced, along with deflationary wage pressures, all of which should improve margins. This, the analysts feel, should arrest the anticipated decline in gold production which may thus now even rise going forward.
This commentary by Lawrie, filed from London, showed up on the mineweb.com Internet site at 2:14 p.m. yesterday afternoon---and it's definitely worth reading.
In the second installment of his series about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly compiles documentation indicating that the bank's auxiliary vault is operated jointly with JPMorgan Chase, whose own gold-vaulting facilities, regulated by the Commodity Futures Trading Commission, are adjacent and apparently being exempted from ordinary disclosure under federal freedom-of-information law because they implicate national defense or foreign policy.
Manly's analysis is headlined "The Keys to the Gold Vaults at the New York Fed -- Part 2: The Auxiliary Vault" and it was posted at the Singapore website bullionstar.com yesterday. I found this gold-related news item in another GATA release and, after having read it, it certainly falls into the absolute must read category.
Shortly after today’s open, the S&P 500 was down nearly 2% and off its recent all-time high by 3.5%. But soon the robo-machines and day traders were buying the “dip” having apparently once again gotten the “all-clear” signal.
Don’t believe it for a second! The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.
Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.
What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry trade speculation that can’t get out of its own way because central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero.
This commentary by David showed up on his Internet site yesterday sometime---and today's first offering is courtesy of Roy Stephens. It's worth skimming.
You will pardon us if we don't "buy" the latest attempt by the Census Department to telegraph housing euphoria with the just reported number of 481K new December home sales, a surge of 11.6% compared to November, an increase which was expected by the consensus to be only 2.7%. In fact, the 481K print is now the "highest" since June of 2008.
The reason for our disbelief? Because as we have been tracking for the past 6, and now 7 months, every single such euphoric print since May of 2014 has been revised substantially lower after the fact (and after the headline-scanning algos promptly gobbled up stocks on the initial "beat"), and sure enough, the November print of 438K, was also just "revised" downward to 431K.
Putting today's "highest in 7 years" new home sales print in context: consider that in May 2014 the same data series was originally reported at 504K... only to be revised to 458K!
This real estate-related article put in an appearance on the Zero Hedge website at 10:17 a.m. EST on Tuesday morning---and I thank Manitoba reader U.M. for her first contribution to today's column.
IBM doesn’t like me. After my column last week predicting massive cuts at the giant computer company, IBM now says I’m wrong, and that there will be nowhere near 110,000 IBM employees laid off. But like my young sons who never hit each other but instead push, slap, graze, or brush, I think IBM is dissembling, fixating on the term 110,000 layoffs which, by the way, I never used. Whatever the word, what counts is how many fewer people will be paid by IBM on March 1 compared to today.
The company has a bad year, so what do you do? Throw a large number of employees under the bus. By any measure this will be a big staff reduction.
Another source told me the plan was to give the people notice before January 28th so they would be off the books by the end of February — one month. That implies a lot of firings, offshore staff reductions, contractors released or strongly motivated early retirements. None of those are layoffs. There will probably be lots of normal layoffs, too, with the required notice. I’m told that senior managers throughout IBM have been pleading for the last few months with higher-up executives not to go through with this because of the risk of consequences such as IBM “breaking” accounts or failing to meet contract obligations. IBM’s customers are going to be the biggest casualty to this week’s staff reductions. That is the message IBM is likely trying to avoid.
This article appeared on the forbes.com Internet site late on Monday afternoon EST---and I found it in yesterday's edition of the King Report. It's not overly long, but certainly worth your while.
The middle class that President Obama identified in his State of the Union speech last week as the foundation of the American economy has been shrinking for almost half a century.
In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today’s dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.
But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom. At the same time, fewer of those in this group fit the traditional image of a married couple with children at home, a gap increasingly filled by the elderly.
This social upheaval helps explain why the president focused on reviving the middle class, offering a raft of proposals squarely aimed at concerns like paying for a college education, taking parental leave, affording child care and buying a home.
This longish commentary put in an appearance on The New York Times website on Sunday---and it's another article I found in yesterday's edition of the King Report.
JPMorgan Chase & Co.’s foreign-exchange traders reaped a gain of as much as $300 million after the Swiss central bank roiled markets by abolishing its cap on the franc, according to two people with knowledge of the matter.
The bank netted $250 million to $300 million on the day of the Swiss National Bank’s surprise decision to scrap the franc ceiling of 1.20 against the euro, said the people, who asked not to be identified because they weren’t authorized to speak publicly. A JPMorgan spokesman declined to comment.
The SNB’s surprise decision on Jan. 15 to remove the three-year-old cap sent the franc soaring as much as 41 percent against the euro that day. JPMorgan is one of the few to emerge from the turmoil with a profit. Citigroup Inc., Deutsche Bank AG and Barclays Plc suffered about $400 million in cumulative trading losses, people with knowledge of the matter have said.
This Bloomberg news item, filed from London, appeared on their website at 1:28 p.m. Denver time yesterday afternoon---and I found it embedded in a GATA release.
Just weeks ago, SPIEGEL published the source code of an NSA malware program known internally as QWERTY. Now, experts have found that it is none other than the notorious trojan Regin, used in dozens of cyber attacks around the world.
Earlier this month, SPIEGEL International published an article based on the trove of documents made available by whistleblower Edward Snowden describing the increasingly complex digital weapons being developed by intelligence services in the US and elsewhere. Concurrently, several documents were published as well as the source code of a sample malware program called QWERTY found in the Snowden archive.
For most readers, that source code was little more than 11 pages of impenetrable columns of seemingly random characters. But experts with the Russian IT security company Kaspersky compared the code with malware programs they have on file. What they found were clear similarities with an elaborate cyber-weapon that has been making international headlines since November of last year.
Last fall, Kaspersky and the U.S. security company Symantec both reported for the first time the discovery of a cyber-weapon system which they christened "Regin". According to Kaspersky, the malware had already been in circulation for 10 years and had been deployed against targets in at least 14 countries, including Germany, Belgium and Brazil but also India and Indonesia.
This short but interesting essay appeared on the German website spiegel.de at 1:21 p.m. Europe time on their Tuesday afternoon---and it's the second contribution of the day from Roy Stephens.
A White House radar system designed to detect flying objects like planes, missiles and large drones failed to pick up a small drone that crashed into a tree on the South Lawn early Monday morning, according to law enforcement officials. The crash raised questions about whether the Secret Service could bring down a similar object if it endangered President Obama.
The drone, which was about two feet in diameter and weighed about two pounds, was operated by a government employee whom the Secret Service did not identify. The agency said the employee was flying the object near the White House around 3 a.m. for recreational purposes when he lost control of it. Officials did not explain why the man, who does not work at the White House and who has not been charged with a crime, was flying the drone at that hour.
The crash was the latest security breach showing the difficulties the Secret Service has had protecting the White House in recent years. In September, a man with a knife climbed over the White House fence and made it deep inside the building before officers tackled him. In 2011, a gunman fired shots that hit the White House while one of the Obama daughters was home.
These drones are going to revolutionize everything---bad and good. This story found a home over at The New York Times website on Monday sometime---and once again I thank Roy Stephens for sending it our way.
The Financial Conduct Authority (FCA) has come under fire for delaying the release of a report into the crisis rescue of Halifax Bank of Scotland (HBOS) until after the general election in May.
Senior Labour politicians, bankers and financial regulators are expected to receive damning criticism for their role in the bank’s near-crash in 2008.
Originally scheduled for publication in April 2013, the deadline was pushed back to the end of 2013 last summer and is now unlikely to be published until September at the earliest.
Business Secretary Vince Cable attacked the delay, saying the employees who lost their jobs as a result of irresponsible management at HBOS deserve better.
This Russia Today news item appeared on their website at 3:41 p.m. Moscow time on their Tuesday afternoon, which was 7:41 a.m. in New York---Moscow time minus 8 hours. It's the second story in a row from Roy Stephens. It's worth reading.
Central banks around the world have teamed up to fleece the public for centuries. Last week, the Swiss National Bank broke rank by not only lying to the public - but by lying to their Central Banking cohorts.
This bite-sized video clip from Mike only lasts for 1:06 minutes, but it's a must watch. It was posted on the youtube.com Internet site early yesterday morning in North America.
Last year Austria's largest bank, Erste Bank, sent shudders of Credit Anstalt through the European Banking System. This year it is Austria's 3rd largest bank that is scaring investors senseless. On the heels of the Swiss National Bank's decision to un-peg from the Euro, Raiffeisen Bank's Swiss-Franc-Denominated mortgage worries have resurfaced (along with Russian/Ukraine write downs) and nowhere is that more evident than the total collapse of the bank's bonds (from over 95c to 65c today).
Even after the ECB Q€ (and some apparent intervention to weaken the Swissy) bonds kept free-falling. Perhaps, the Freedom Party's demands for a bailout will grow louder as the contagion concerns across Europe's banking system explode...
As Bloomberg reports, Raiffeisen had a total of €4.3 billion of Swiss franc loans outstanding as of September 2014, according to estimates by Moody’s Investors Service.
The plunge appears focused on the potential capital shortfalls and talk of the bank selling its Russian unit - both have been denied...
This worthwhile read appeared on the Zero Hedge website at 11:29 a.m. EST on Tuesday morning---and my thanks got out to reader U.M. for sharing it with us.
Last week we wrote in the context of Swiss franc denominated loans to consumers in Europe:
“Another problem is that governments may react to the situation by shifting the losses suffered by mortgage debtors back to the banks – this has e.g. already happened in Hungary. Not surprisingly, this policy has been hugely popular with the country’s population, but very costly for the banks. Since the necessary write-downs have already been taken, no further damage is to be expected from CHF mortgages outstanding in Hungary – the main danger for the banks is rather that the governments of other countries may consider adopting similar policies.”
It didn’t take long for a government to get in on the act. Poland’s government faces elections this year (both presidential and parliamentary), which is likely a major motivation for considering going down Hungary’s path with respect to CHF denominated consumer loans. It presumably hasn’t escaped the attention of Poland’s government that Viktor Orban’s Fidesz party has been faring rather well in Hungarian elections. Hence Polish prime minister Ewa Kopacz informed a throng of potential voters up to their eyeballs in CFH denominated debt that she would seek to move their losses to the banks.
This very interesting article showed up on the acting-man.com Internet site yesterday sometime---and I thank Roy for sliding it into my in-box late yesterday evening Mountain Standard Time.
1. Greece’s New Finance Minister Says Euro Is Like Hotel California: Bloomberg 2. Greek coalition braces for debt showdown as Germany rattles sabre: The Telegraph 3. Greek PM Alexis Tsipras appoints radical economist to new government: The Guardian 4. Greece's New FinMin Explains "This is What Happens When You Humiliate a Nation and Give It No Hope": Zero Hedge 5. E.U. hints at more time, but no Greek write-offs : EU Observer 6. Greece at the Crossroads: The Oligarchs Blew It: Zero Hedge 7. Germany's top institutes push 'Grexit' plans as showdown escalates: The Telegraph
Note: The 'thought police' at Bloomberg have given us a new title to story #1. It's now headlined "New Greek Finance Minister Takes His Default Show on the Road".
[The above stories are courtesy of Roy Stephens, South African reader B.V., reader M.A.---and Casey Research's own Marin Katusa]
The new far-left government in Greece dropped a bombshell on its first day in office by abjuring an E.U. statement on Russia.
It said in a press communique on Tuesday (27 January): “the aforementioned statement was released without the prescribed procedure to obtain consent by the member states and particularly without ensuring the consent of Greece”.
“In this context, it is underlined that Greece does not consent to this statement”.
It added that its new PM, Alexis Tsipras, expressed “discontent” in a phone call to E.U. foreign relations chief Federica Mogherini.
This news item, filed from Brussels, was posted on the euobserver.com Internet site at 6:52 p.m. Europe time on their Tuesday evening---and it's another contribution from Roy Stephens. It's worth reading.
The International Monetary Fund will assist Ukraine only after the situation inside the country is stabilized. The IMF Executive Director Christine Lagarde made this announcement in a Monday interview with Le Monde.
In her words, IMF experts assumed that the conflict would be over by the winter when determining the financial support plan. “Now we are developing new variants, including giving Ukraine four years to implement reforms”, clarified Lagarde.
She also said that the level of financing will “probably be somewhat higher than anticipated,” but that will depend on military-political factors. Lagarde underscored that all IMF plans assume the stabilization of situation in Ukraine. “That is the priority. The linkage between economic and military situation is self-evident,” said Lagarde.
To translate into human language, THEY WILL NOT GIVE KIEV ANY MONEY (as if there were any doubts). That means the situation will develop rapidly and toward the rapid deterioration of the internal situation and toward an COUP D’ETAT of one sort or another. It’s only a matter of time (give or take a month). But this time it won’t be the usual standing around on a square, but a swift and short clash of armed men or a CAPITULATION without a fight (which cannot be ruled out, since it would be preferable to Poroshenko, but I’m sure the Kremlin would not like that, therefore we’re still waiting).
This brief, but absolute must read commentary, especially for all serious students of the New Great Game, put in an appearance on the fortruss.blogspot.ca website yesterday---and it is, of course, courtesy of Roy Stephens once again.
The decision to cut the status of Russian government debt to “junk” on Monday was politically motivated, Vladimir Putin has said.
Standard and Poor’s (S&P), a ratings agency, slashed the rating it holds on Russian sovereign debt from BBB- to BB+, taking it below investment grade status for the first time in a decade.
A prolonged oil price slump and heavy sanctions over tensions in Ukraine have weighed heavily on the Russian economy. The rouble has slid by close to 49pc against the dollar since the beginning of 2014 as a result. More sanctions may soon be deployed, making things harder still.
S&P said: “The reason for the deviation is a significant change in our perception of Russia’s monetary flexibility.” The downgrade in part reflected “the effect we expect Russia’s weakening economy to have on its financial system,” the agency continued.
Putin is right. Politics is the only reason. This item showed up on the telegraph.co.uk Internet site at 3:53 p.m. GMT yesterday afternoon---and it was in my in-box six minutes later at 8:59 a.m. MST, courtesy of Roy Stephens.
The Russian president has blasted attempts to rewrite the history of WWII and hide the crimes of Nazism as inadmissible and immoral, adding that people who do this often try to distract attention from their nations’ collaboration with Hitler.
“It is hard to imagine that real ‘death factories,’ mass executions and deportations have become a terrible reality of the 20th century, that they were cold-bloodedly and thriftily organized in Europe that seemed to be civilized back then,” Vladimir Putin said as he spoke in the Jewish Museum and Tolerance Center in Moscow at the event dedicated to the 70th anniversary of Auschwitz’s liberation.
“Direct attempts to silence history, to distort and rewrite history are inadmissible and immoral. Behind these attempts often lies the desire to hide one’s own disgrace, the disgrace of cowardice, hypocrisy and treachery, the intent to justify the direct or indirect collaboration with Nazism,” the Russian leader stated.
This very interesting article was posted on the Russia Today website at 2:51 p.m. Moscow time on their Tuesday afternoon---and the stories from Roy just keep on coming.
Russia’s response to a possible cut-off from the SWIFT international banking payment system will be “unrestricted,” Prime Minister Dmitry Medvedev vowed. The West is pushing for hitting Moscow with more sanctions as the Ukraine crisis deteriorates.
"We will see what happens, but of course if such decisions are made, I want to note that our economic reaction and generally any other reaction will be unrestricted," the Russian prime minister said on Tuesday, calling on the government to “work out concrete decisions which would help our economy in those conditions.”
Calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West, and the introduction of sanctions in response to Moscow’s alleged role in the Ukraine conflict.
Thus, last August the UK proposed to exclude Russia from the SWIFT system as a part of sanctions imposed on the country due to the situation in eastern Ukraine.
This article, also courtesy of the Russia Today Internet site, showed up there at 8:31 p.m. yesterday evening Moscow time, which was 12:31 p.m. EST.
Iran and Russia plan to create a joint account for national currency trade, Iranian Ambassador to Russia Mehdi Sanaei told RIA Novosti in an interview on Tuesday.
“Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this],” Sanaei said.
The Iranian ambassador added that relations between Moscow and Tehran “are actively developing” and that 2014 was “a very fruitful year” for both countries.
He also said that Tehran expects to sign a contract or memorandum of mutual understanding in 2015 with the Eurasian Economic Union to begin exports to Russia.
This story from the sputniknews.com Internet site, found a home over at the Tehran Times early yesterday evening local time---and I thank Roy Stephens for sending it.
No one in Western corporate media will tell you why U.S. President Barack Obama is hitting Riyadh with a high-powered delegation to “pay his respects” to the new House of Saud potentate, King Salman.
Talk about a who’s who – including CIA head John Brennan; General Lloyd Austin, head of U.S. Centcom; Secretary of State John Kerry; leading House Democrat Nancy Pelosi; and even senile Senator John “Bomb Iran” McCain.
It must have been heart wrenching for most in this crowd to skip a visit to the Taj Mahal in India so they would be part of the last-minute, “unscheduled” stop in Riyadh.
This is how the astonishing mediocrity that doubles as U.S. Deputy National Security Adviser Ben Rhodes, spun it; “Principally, I think this is to mark this transition in leadership and to pay respects to the family and to the people of Saudi Arabia, but I’m sure that while we’re there they’ll touch on some of the leading issues where we cooperate very closely with Saudi Arabia.”
The White House and the Pentagon did not bother to “pay their respects” in person to the people of France after the Charlie Hebdo massacre. The House of Saud – “our” top bastards in the Persian Gulf – is of course much more valuable.
Pepe pulls no punches in this essay posted over at the Russia Today website at 3:45 p.m. Moscow time yesterday afternoon---and it falls into the absolute must read category. It's also the final offering of the day from Roy Stephens---and I thank him on your behalf.
Russia extended its buying spree of gold to a ninth straight month, and the price of gold rose for the first time in five months, data from the International Monetary Fund showed today.
The global financial institution later confirmed that the Netherlands did not increase its bullion holdings in December, contrary to the IMF's earlier report that the bank had raised gold holdings for the first time in 16 years.
The Dutch central bank, the world's ninth-biggest official sector gold holder, has kept its holdings unchanged since late 2008. The bank earlier on Tuesday denied that it bought more gold last year.
This corrected Reuters story, filed from Singapore, appeared on their website at 11:48 a.m. EST yesterday morning---and I borrowed it from the gata.org Internet site, but the first reader through the door with this news on Tuesday morning was reader U.M.
Germany’s financial regulator BaFin has found no evidence to support allegations of manipulation in the gold market or that currency exchange rates were systematically rigged, according to its head of banking supervision.
Raimund Roeseler also said the watchdog is close to concluding a probe into alleged attempts to rig the London Interbank Offered Rate, a benchmark for borrowing costs. He didn’t comment on the results of that investigation.
The probe into currency markets is still under way, he said. Roeseler spoke to Handelsblatt newspaper in an interview published in Frankfurt Monday. Oliver Struck, a spokesman for BaFin, confirmed the comments in an e-mail to Bloomberg News.
Banks worldwide have paid billions of dollars in fines as regulators probe allegations traders sought to profit by manipulating currency and commodity markets as well as benchmark interest rates.
As I've been saying for years---and nobody is paying attention---it's not and has never been the London p.m. gold fix that's the issue, it's the London bias between the London open and the London p.m. fix that's been the root of all evil since January 1, 1975. I explained all this at the Casey conference in San Antonio last September---charts and all. This Bloomberg gold-related news item, filed from Frankfurt, appeared on their Internet site at 12:34 p.m. MST yesterday. I thank reader U.M. for digging this story up on our behalf.
Gold shipments to China from Hong Kong fell 32 percent in 2014 from a record a year earlier as lower prices failed to boost the purchases of bars, coins and jewelry amid a clampdown on corruption and an economic slowdown.
Net imports by mainland China were 750 metric tons last year, down from 2013 when shipments more than doubled to 1,108.8 tons, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department. Imports in December fell 36 percent from the same month last year, according to the figures, which deduct flows from China into Hong Kong.
Demand for luxury goods including bullion has been hurt by an anti-graft drive in China, while volatility that sank to a four-year low and a rally in stock markets damped interest in the metal as an investment. The buying frenzy that helped push China’s consumption above India’s after prices dropped into a bear market in 2013 hasn’t been sustained, leading banks including Goldman Sachs Group Inc. to predict further declines.
Well, if you're looking for anti-gold propaganda, this bulls hit piece fills the bill nicely. Of course gold imports to China through Hong Kong are declining, as they really cut back on their imports through that portal earlier in the year, as they're now doing most if without publicity through Shanghai and Beijing. That started changing several months back---but imports through Hong Kong to China are nowhere near back to normal---and most eyes are now focused on the weekly withdrawals from the Shanghai Gold Exchange. This gold-related news item, if you wish to dignify it with that name, was filed from Singapore---and appeared on the Bloomberg website at 3:08 a.m. Denver time yesterday morning---and it's also courtesy of reader U.M.
This 25-minute audio interview with the "good doctor" was conducted on Sunday afternoon on all-talk radio WAAM 1600 out of Ann Arbor, Michigan. It was posted on the davejanda.com Internet site on Monday, but I decided to save it for today's column, as it would have got lost in Tuesday's missive.
With government bond yields negative in Switzerland and parts of Europe, gold looks attractive by comparison, bond trader Jeffrey Gundlach of Doubleline Capital said in a television interview Tuesday.
The yield on 10-year Swiss debt turned negative earlier this month, and yields on a number of shorter-dated eurozone government bonds have also been in negative territory, meaning investors are effectively paying governments for the privilege of holding their paper.
“Amazingly, people are paying Switzerland to warehouse their money for 10 years...That makes gold a high-yielder, because it yields zero,” Gundlach quipped in an interview with CNBC. “So you’re in a world that is being incrementally favorable for gold.”
And with volatility in the currency market rising, gold is likely to continue rising “in the months to come,” he said.
This story appeared on the marketwatch.com Internet site at 1:13 p.m. EST yesterday afternoon---and the 3:10 minute CNBC video clip is linked in the article. I thank Manitoba reader U.M. for her final contribution in today's column---and it's worth your while.